Carter Unveils Budget Details; Pentagon Requests $582.7 Billion

WASHINGTON — President Obama's fiscal year 2017 budget will request $582.7 billion in funding for the Pentagon, including $71.4 billion for research and development, $7.5 billion to fight the Islamic State group, $8.1 billion for submarines, and $1.8 billion on munitions, Secretary of Defense Ash Carter announced Tuesday morning.

In a speech previewing next week's budget release, Carter also highlighted new technologies his department is developing to meet what he called a "major inflection point" that takes "the long view" for the Department.

The budget, Carter explained, was driven by five key factors: the rise of great powers in Russia and China, the threat of North Korea to the US and its Pacific allies, Iran's "malign influence" against allies in the Gulf, and the ongoing fight against the Islamic State group, commonly known as ISIL or ISIS.

"We don't have the luxury of just one opponent, or the choice between current fights and future fights – we have to do both," Carter said. "And that's what our budget is designed to do."

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In other words, the budget again reflects the dual nature of the threats facing the Pentagon – both from near-peer nations such as Russia and China that require new technologies to counter, and from counterinsurgency operations.

"Key to our approach is being able to deter our most advanced competitors. We must have – and be seen to have – the ability to impose unacceptable costs on an advanced aggressor that will either dissuade them from taking provocative action, or make them deeply regret it if they do," Carter said, adding that "In this context, Russia and China are our most stressing competitors."

Among the numbers put out by Carter:

The Pentagon is allocating $7.5 billion in 2017, or 50 percent more than 2016, for the fight against ISIL.

The Defense Department is also investing $1.8 billion in 2017 to buy more than 45,000 more precision-guided munitions, separate from the anti-ISIL funding. Although Carter did not explicitly say so, that is expected to go under the overseas contingency operations (OCO) account.

The retirement of the A-10 has been deferred until 2022, when it will be replaced by squadrons of F-35A joint strike fighters coming online. The fight over the A-10 had raged through the past two budgets, with members of Congress shutting down the Air Force’s attempts at retiring the attack aircraft. By pushing the retirement to 2022 and out of the Future Years Defense Program (FYDP), the Obama administration is essentially punting the retirement fight to the next administration.

The European Reassurance Imitative (ERI), the umbrella under which funding for European support has been funneled following Russia’s invasion of Ukraine in 2014, will be more than quadrupled from 2016, going from $789 million to $3.4 billion for this budget.

For submarines, the Pentagon invests $8.1 billion in 2017, and more than $40 billion over the next five years. That buys nine Virginia-class attack submarines over the next five years, while equipping "more" with the Virginia Payload Module.

For cyber, the department is planning to invest $7 billion in 2017 and almost $35 billion over the next five years.

Although Carter did not offer a figure for spending on space assets, he did say the Pentagon will be spending "even more" than last year, when it offered $5 billion for new space systems.

The budget contains what Carter called "full funding for the Afghan Security Forces," although he did not explain what that funding requirement is.

Carter pledged to reduce overhead by "more than $8 billion over the next five years," savings which he pledged would be plowed back into "real capability."

For the second year in a row, the budget grows the research and development accounts for the department, for a total of $71.4 billion in 2017.

The last point is key if the Pentagon is to move forward with the so-called third offset technology development strategy, as acquisitions head Frank Kendall expressed at a December event.

"If you don't do the R&D, you won't have a product at all," Kendall said. "It's a fixed cost. Once you take the R&D out you are denying yourself future products, in any quantity, period."

And the budget does feature the development of new projects, with Carter highlighting the work of the Strategic Capabilities Office, a group he created in 2012 to "re-imagine existing DoD, intelligence community, and commercial systems by giving them new roles and game-changing capabilities to confound potential opponents."

The first piece Carter highlighted was a navigation program that featured researchers putting "the same kinds of micro-cameras and sensors that are littered throughout our smartphones today, and putting them on our Small Diameter Bombs to augment their targeting capabilities." The goal, he said, is to create a modular kit that will work with many other payloads.

The second is focused on swarming, autonomous vehicles.

"For the air, they've developed micro-drones that are really fast, and really resilient – they can fly through heavy winds and be kicked out the back of a fighter jet moving at Mach 0.9, like they did during an operational exercise in Alaska last year, or they can be thrown into the air by a soldier in the middle of the Iraqi desert," Carter said. "And for the water, they've developed self-driving boats, which can network together to do all sorts of missions, from fleet defense to close-in surveillance – including around an island, real or artificial, without putting our sailors at risk."

Another program involves taking the projectile developed for the electromagnetic railgun and installing it on existing weapons – "including the five-inch guns at the front of every Navy destroyer, and also the hundreds of Army Paladin self-propelled howitzers" – to turn them into missile defense systems. Carter noted that this system was successfully tested on a Paladin a month ago.

Finally, Carter offered the vision of an "arsenal plane," which takes an unnamed, older Air Force platform turns it into "a flying launch pad for all sorts of different conventional payloads. In practice, the arsenal plane will function as a very large airborne magazine, networked to 5th-generation aircraft that act as forward sensor and targeting nodes – essentially combining different systems already in our inventory to create wholly new capabilities"

Missing from Carter's speech was a mention of the F-35, which is expected to face cuts as part of the tradeoffs to fund other priorities. He also did not mention the decision to turn the Navy's UCLASS system into a refueling asset known as CBARS, first revealed Monday by Defense News.

Trade-Offs

Carter largely avoided talking about what trade-offs would need to be made inside the budget, but did call out a significant one: cutting the Littoral Combat Ship (LCS) buy, something he described as "part of a broader effort in our budget to focus the Navy on having greater lethality and capability that can deter and defeat even the most high-end future threats."

That move very publicly went against the wishes of Navy Secretary Ray Mabus, something Carter was asked about by David Rubenstein, president of the Economic Club of Washington and the event's host, and specifically what Carter would do if the Navy goes up to the Hill to fight to replace those ships.

Carter indicated he would argue for what "we, including in the Navy, think is the best balance," while noting that he plans to increase the size of the Navy to 308 ships.

"We had to make trade-offs," Carter acknowledged. "In each of the services, you make trade-offs, as I said, for force structure, capability investment and readiness. All three of those are important and you just have to balance – we only have so many dollars."

Rubenstein also asked about the future of the Gerald Ford-class carrier program, which has struggled with cost overruns.

"That is a program that was undisciplined. We're trying to wrestle that one into shape, but I'm not going to try to justify the history of the Ford-class carrier over the last 15 years or so," Carter responded. "I think we'll, of course, will buy more aircraft carriers in the future. I'm supposing we will, but not that way."

Carter also said that the department has been doing a "thorough review for the last several months" on potential Goldwater-Nichols reform, and said he expects to "begin receiving recommendations on that in coming weeks and making decisions."

Goldwater-Nichols reform is a hot topic with both the Senate and House Armed Services leadership, and Carter has been attempting to create his own slate of reforms to avoid having the changes directed to the department.

Aaron Mehta is the Senior Pentagon Correspondent and Associate Editor for Defense News, covering policy, strategy and acquisition at the highest levels of the Department of Defense and its international partners.